Morning Market Review for May 6, 2021

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Global weather worries extend corn, soy rallies. (Comments are updated by 7:30 a.m. Central Time.)

Plus – all the export news you need to know before this morning’s weekly USDA Export report

  • Corn up 6-9 cents
  • Soybeans up 11-19 cents, soyoil up $1.17/lb, soymeal up $3.50/ton
  • Wheat down 1-5 cents

*Prices as of 6:50 am CDT.

Editor’s Note: Our latest Feedback from the Field analysis is live! This week’s article features an exclusive look at corn planting progress on the Holland family dairy farm in northwestern Illinois as well as photographic evidence of my favorite nephew, Gus!

Hope you all had a happy Cinco de Mayo yesterday! If you are looking for an easy read after last night’s margaritas and for more on planting activities around the Corn Belt, check out our slideshow showcasing the earliest days of 2021 planting season!

The Feedback from the Field series is an open-sourced platform for U.S. growers to share and investigate growing conditions across the country. Want to get in on the action?! Click here to take our ongoing farmer survey on crop progress at any point in the 2021 grain season. Our Google Map, updated daily, provides all past responses for farm readers.

Corn

Corn markets appeared to be unphased after China cancelled 5.5 million bushels of 2020/21 corn export sales yesterday morning. Prices matched a 2013 high ($7.23/bushel) in overnight trading before easing back down as drought conditions in Brazil and the resultant tightening global supply outlook offset China’s plans in to increase corn production this spring.

China’s cabinet agreed overnight to increase subsidies for corn and soybean producers in response to high international grain prices and looming potential shortages. China will also stabilize minimum purchase prices for wheat and rice. The effort could pay off for the world’s second largest economy – state officials are already expecting a bumper crop of grains this summer, barring any significant weather damage.

A Brazilian trade group expects local farmers will export 5% fewer bushels of corn this year amid a delayed planting season for the safrinha corn crop and an ongoing drought currently stressing crop development. Anec, Brazil’s cereal grains exporter association, expects favorable growing conditions in Mato Grosso to partially offset drought conditions across the country and enable 1.3 billion bushels of corn to be shipped into international channels – as long as current drought conditions do not intensify. USDA currently forecasts Brazil’s 2020/21 corn exports at 1.5 billion bushels.

March 2021 corn exports set a new record high volume on record-breaking loading paces to China and Japan as the world scrambles to source cheap – and available – feedstuffs. Will that trend continue in today’s weekly export sales report from USDA?

Monthly U.S. Corn Exports by Volume

Rank

Month

Year

Volume (bu.)

1

March

2021

372,770,121

2

May

2018

305,200,728

3

April

2018

300,997,233

4

November

1989

293,626,279

5

June

2018

282,773,096

Source: USDA Global Agricultural Trade System, U.S. Commerce Department

Tuesday’s export updates from the Commerce Department found March 2021 corn shipments blowing the previous high set in May 2018 out of the water. U.S. exporters shipped nearly 372.8 million bushels of corn to foreign destinations in March 2021.

Today’s report will likely see a continuation of that trend. If Monday’s Grain Inspections for Export report is to be believed, which saw 84.2 million bushels of corn weighed for export shipment during the week of April 22 – 28, today’s weekly corn export volume could be the second highest weekly volume on record.

But this isn’t exactly new news for weekly corn exports. Seven of the largest weekly shipping volumes have been reported in the last nine weeks, with today’s report likely to increase that total to eight of ten. As ethanol production recovers from the pandemic, processors will be hard pressed to compete with export demand at the Gulf for any remaining 2020 bushels left in storage bins.

Two large daily flash sales reported by USDA via private exporters during the April 22-28 reporting week could help boost weekly corn export sales in today’s report. The unknown buyer booked two sales of 2.0 million bushels each, one for delivery in the current marketing year and the other for 2021/22 delivery.

Market analysts expect today’s report to show 7.9 million – 35.4 million bushels of weekly export sales for 2020/21 corn and 4.0 million – 23.6 million bushels for 2021/22 corn exports.

Rising export demand for ethanol and a return to pre-pandemic travel sent weekly ethanol production up for the third consecutive week, according to weekly data updated by the U.S. Energy Information Administration. Several ethanol plants idled during the pandemic have come online over the past few weeks and continue to return to full capacity as the country emerges from winter and a year-long economic slowdown.

For the week ending April 30, weekly ethanol output grew 0.7% to nearly 40.0 million gallons/day. It marked the ninth consecutive week that weekly corn consumption for ethanol surpassed 100 million bushels per week.

Production targets finally moved within operating ranges supporting blending activity as ethanol stocks increased for the first time in seven weeks. For the week ending April 30, ethanol stocks grew by nearly 30 million gallons to 858.5 million gallons.

Consumer demand for fuel plateaued on the week, shedding 0.1% from last week to 372.3 million gallons/day. But refiners continue to blend ethanol into gasoline at pre-pandemic levels in anticipation of more fuel demand. Weekly blending rose 0.8% to 37.3 million gallons/day.

Soybeans

Despite China slowing buying paces of Brazilian soybeans as prices continue to soar, soybean futures prices climbed $0.11-$0.19/bushel higher this morning on concerns about unfavorable weather events that could further tighten global supplies. The complex attributed much of its early morning gains to a rise in corn prices.

Soybean exports fell to a mere 2.3 million bushels in March 2021, according to export data released by the U.S. Commerce Department on Tuesday. The March figure was nearly half of February 2021 loading paces and 11% lower than March 2020 shipments as Chinese demand shifted to Brazil’s freshly harvested soybean crop.

That overarching sentiment will likely result in another week of slow soybean loading paces in today’s export sales report released by USDA. Monday’s Grain Inspections for Export report found weekly soybeans weighed for export dropping to 5.3 million bushels. If realized, that total would be a new marketing year low for weekly soybean export loading paces.

Prices are likely to receive more support from today’s report of updated soybean export sales data. Trade estimates predict this week’s soy export sales for 2020/21 shipments could see 3.7 million bushels of cancellations or up to 7.3 million bushels of new sales.

New crop soy export sales are predicted between 3.7 million – 22.0 million bushels. USDA announced a 4.4-million-bushel sale of 2021/22 soybeans to an unknown buyer last week, which could help boost today’s weekly sales total for new crop beans.

Weather uncertainty is likely to be the biggest driver of market prices in the coming months, Farm Futures’ executive editor Mike Wilson and contributing analyst Bryce Knorr explain. Revenue protection insurance is likely to provide little benefit to growers this year.

Success will boil down to two key components: maintaining yield and sound marketing execution. “Doing nothing has its own risk,” Wilson and Knorr surmise. “Trying to pick the top of the market could mean waiting too long, then becoming that deer frozen in the headlights if prices crash into harvest. Losses are possible on both corn and soybeans if prices and yields fall enough.”

Farmers from across the Corn Belt share financial tips and strategies for capturing marketing opportunities and improving operational efficiencies in these volatile times in this cover story featured in our June 2021 print issue. “If this market gets spicy, this summer may be the best chance in a long time to put your business on the right track to prosperity.”  

Wheat

Slowing export demand, particularly from Algeria and Morocco, the world’s eighth and ninth largest importers, respectively, weighed on prices in the wheat complex overnight, sending Chicago and Kansas City futures $0.01-$0.05/bushel lower.  Minneapolis futures had shed a penny at last glance, though the complex retained some support from drought conditions in the Northern Plains, where farmers are wrapping up spring wheat planting activities. A weaker dollar capped the overnight losses.

Wheat exports in March 2021 increased 18% from February 2021 loading paces, according to export data released by the Commerce Department earlier this week. Calendar year-to-date U.S. wheat shipping paces are only a hair (1%) higher than the same time last year.

Despite a steady uptick in U.S. wheat shipments to China, a stronger dollar and rising grain prices have deterred other buyers from purchasing U.S. wheat in recent months – namely Mexico. This is a sentiment that is likely to be echoed in today’s weekly export sales report from USDA.

For the reporting week ending April 28, exporters only reported 18.7 million bushels of wheat weighed for export in Monday’s Grain Inspections for Export report from USDA. The total was 2.6 million bushels lower than last week’s haul and only marginally raises loading paces above the same levels reported last year.

With a handful of weeks left in the 2020/21 wheat marketing year, old crop export sales are likely to slow in today’s report. Trade estimates place 2020/21 weekly wheat export sales as high as 9.2 million bushels, though new crop export sales are more optimistic at 3.7 million – 18.4 million bushels. No large daily flash sales of wheat were reported by USDA through the week ending April 28.

Weather

Showers will move through the Eastern Corn Belt today, according to NOAA’s short-range forecasts. Accumulation could reach up to a half inch, though with dry soil conditions in the region any moisture will likely be quickly absorbed by the soil, allowing farmers to quickly return to the fields to continue spring planting activities.

Financials

Coronavirus cases in the U.S. rose by 44,611 cases from yesterday to 32,558,066 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 777 lives to 579,280 deaths as of press time.

The CME Group Inc. announced yesterday open floor pit trading on the Chicago Board of Trade would officially end on September 17. Open outcry in the option pits at the CBOT dates back 173 years and was glorified in the 1980’s Eddie Murphy comedy, Trading Places.

Trading was largely done on electronic platforms leading up to the March 2020 closure of the pits due to the pandemic. Electronic trading will continue to dominate trade transactions after the option pits close permanently in September, much as it has done during the pandemic. But old school traders remain nostalgic for the glory days of open outcry.

“I guess I am not surprised,” Dan Huber, an independent broker who spent 31 years on the trading floor told Bloomberg. “Sad to see it end this way but we will all turn the page and move on. It was a good run.”

Farm financial guru and Idaho rancher Dick Wittman will join the prestigious list of speakers at this year’s Farm Futures Business Summit, to be held June 16-17 at the Coralville Marriott Hotel and Conference Center just outside Iowa City. If you are interested in Wittman’s insights on professionalizing the family farm, check out the Farm Futures Business Summit website for speaker and registration information.

World food prices are on track to match peaks set in May 2014 as soaring grain, oilseed, meat, dairy, cotton, and sugar prices increase the cost of a typical grocery basket for households across the globe. The United Nations’ Food and Agriculture Organization reported its food price index had risen to 120.9 points in April 2021, up from 118.9 points in March.

But rising grains acreage – particularly for that of wheat and corn – across the world could help to calm food prices later this year. The FAO expects Brazil, Ukraine, China, and the U.S. to increase corn and wheat acres this year and anticipates more favorable wheat yields from the European Union by summer’s end as well.

Morning Ag Commodity Prices - 5/6/2021
Contract Units High Low Last Net Change % Change
MAY '21 CORN $ / BSH  7.675 7.56 7.56 0.0275 0.37%
JUL '21 CORN $ / BSH  7.225 7.095 7.1325 0.0475 0.67%
SEP '21 CORN $ / BSH  6.42 6.3175 6.3575 0.0475 0.75%
DEC '21 CORN $ / BSH  6.18 6.05 6.125 0.0775 1.28%
MAR '22 CORN $ / BSH  6.205 6.0825 6.155 0.07 1.15%
MAY '22 CORN $ / BSH  6.2 6.095 6.165 0.0675 1.11%
JUL '22 CORN $ / BSH  6.1725 6.0675 6.14 0.055 0.90%
MAY '21 SOYBEANS $ / BSH  16.0525 15.8975 15.99 0.17 1.07%
JUL '21 SOYBEANS $ / BSH  15.6775 15.43 15.5975 0.175 1.13%
AUG '21 SOYBEANS $ / BSH  15.1375 14.9225 15.07 0.155 1.04%
SEP '21 SOYBEANS $ / BSH  14.375 14.1725 14.31 0.155 1.10%
NOV '21 SOYBEANS $ / BSH  14 13.83 13.9375 0.11 0.80%
JAN '22 SOYBEANS $ / BSH  13.975 13.83 13.9125 0.1075 0.78%
MAR '22 SOYBEANS $ / BSH  13.705 13.5625 13.655 0.1075 0.79%
MAY '22 SOYBEANS $ / BSH  13.6075 13.5 13.5775 0.1 0.74%
JUL '22 SOYBEANS $ / BSH  13.6025 13.495 13.58 0.1175 0.87%
MAY '21 SOYBEAN OIL  $ / LB 66.5 #N/A 66.74 0 0.00%
JUL '21 SOYBEAN OIL  $ / LB 64.85 63.58 64.54 1.08 1.70%
MAY '21 SOY MEAL $ / TON 427.8 427.4 427.8 3.5 0.82%
JUL '21 SOY MEAL $ / TON 430.1 425 428.4 4 0.94%
AUG '21 SOY MEAL $ / TON 424 419.5 422.7 3.6 0.86%
SEP '21 SOY MEAL $ / TON 416.6 413 415.4 2.5 0.61%
OCT '21 SOY MEAL $ / TON 407.7 404.6 406.7 1.2 0.30%
MAY '21 Chicago SRW $ / BSH  7.61 7.535 7.535 -0.0225 -0.30%
JUL '21 Chicago SRW $ / BSH  7.5475 7.37 7.3825 -0.0625 -0.84%
SEP '21 Chicago SRW $ / BSH  7.5375 7.37 7.3825 -0.0575 -0.77%
DEC '21 Chicago SRW $ / BSH  7.55 7.39 7.3975 -0.0625 -0.84%
MAR '22 Chicago SRW $ / BSH  7.58 7.4275 7.4375 -0.0575 -0.77%
MAY '21 Kansas City HRW $ / BSH  0 #N/A 7.0975 0 0.00%
JUL '21 Kansas City HRW $ / BSH  7.2975 7.14 7.1525 -0.0175 -0.24%
SEP '21 Kansas City HRW $ / BSH  7.34 7.1825 7.205 -0.015 -0.21%
DEC '21 Kansas City HRW $ / BSH  7.4 7.25 7.2775 -0.0075 -0.10%
MAR '22 Kansas City HRW $ / BSH  7.4275 7.3225 7.3525 0.0025 0.03%
MAY '21 MLPS Spring Wheat $ / BSH  7.735 #N/A 7.795 0 0.00%
JUL '21 MLPS Spring Wheat $ / BSH  7.8825 7.78 7.83 0.01 0.13%
SEP '21 MLPS Spring Wheat $ / BSH  7.935 7.835 7.8725 0.0025 0.03%
DEC '21 MLPS Spring Wheat $ / BSH  7.95 7.8525 7.89 0.01 0.13%
MAR '22 MLPS Spring Wheat $ / BSH  7.955 7.8875 7.9075 0.015 0.19%
JUN '21 ICE Dollar Index $ 91.38 90.99 91.025 -0.268 -0.29%
 JU '21 Light Crude $ / BBL  65.98 64.98 65.2 -0.43 -0.66%
 JU '21 Light Crude $ / BBL  65.93 64.94 65.16 -0.43 -0.66%
JUN '21 ULS Diesel $ /U GAL 2.0116 1.985 1.9882 -0.0143 -0.71%
JUL '21 ULS Diesel $ /U GAL 2.012 1.9872 1.9894 -0.0141 -0.70%
JUN '21 Gasoline $ /U GAL 2.1543 2.1266 2.1305 -0.0208 -0.97%
JUL '21 Gasoline $ /U GAL 2.1455 2.119 2.1233 -0.0183 -0.85%
MAY '21 Feeder Cattle $ / CWT 0 #N/A 131.475 0 0.00%
AUG '21 Feeder Cattle $ / CWT 0 #N/A 145.225 0 0.00%
 JU '21 Live Cattle $ / CWT 0 #N/A 114.425 0 0.00%
 AU '21 Live Cattle $ / CWT 0 #N/A 117.725 0 0.00%
MAY '21 Live Hogs $ / CWT 0 #N/A 111.375 0 0.00%
JUN '21 Live Hogs $ / CWT 0 #N/A 114.425 0 0.00%
MAY '21 Class III Milk $ / CWT 19.07 #N/A 19.15 0 0.00%
JUN '21 Class III Milk $ / CWT 19.65 #N/A 19.76 0 0.00%
JUL '21 Class III Milk $ / CWT 19.63 #N/A 19.86 0 0.00%
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